The markets have been volatile recently, but the fluctuations have been nothing like those exhibited by Cassava Sciences (SAVA) stock. After a mercurial ascent throughout the year’s first half, since the end of July, shares have lost 55% of their value.
The stock’s rise and fall has been entirely based on the events surrounding simufilam - the company’s prospective treatment for the notoriously difficult-to-treat Alzheimer’ disease (AD). Earlier in the year, the data from an ongoing open-label study showed that the drug improved patients’ cognitive behavior after 6 months and even after 9 months of therapy – something that no Alzheimer’s treatment has ever done before. But then questions regarding the company’s methods and use of the data surfaced and a citizen petition was filed with the FDA alleging the data was manipulated and the study’s results were a sham. Following which Cassava stock appeared more like hot potatoes – hot cassavas? – with investors backing away.
Sentiment has been low, then, but might a turnaround be in the cards? On Wednesday, the company reported that following 12-months of simufilam treatment, patients’ cognitive functions further improved – albeit at a more measured pace - and stressed that the analysis was done by two separate independent biostatisticians after the cognitive test results were entered into a system overseen by an outside company.
Longtime fan B.Riley’s Mayank Mamtani has backed Cassava all the way, but while the analyst says the cognition data could “help reinvigorate confidence” ahead of the imminent Phase 3 study (earmarked for Q4), he thinks more information will be required for sentiment to truly change.
“While this cognition data update and evaluation methodology, to some extent, helps assuage investor concerns emanating from the recent Citizen's Petition filed challenging the core scientific hypothesis of simufilam, we highlight the need for supportive 12-month biomarker analyses, also similarly conducted independent of the company and its affiliates to help reconstruct comparable levels of confidence in simufilam's disruptive potential noted earlier in 3Q when SAVA posted a comprehensive 9-month data update at AAIC'21 medical conference,” Mamtani noted.
All in all, Mamtani maintains a Buy rating on SAVA shares along with a $108 price target. Investors could be sitting on returns of 80%, should his thesis bear fruit over the next 12 months. (To watch Mamtani’s track record, click here)
The unanimous Strong Buy consensus rating on this stock, supported by 4 Buy ratings and 1 Hold, makes it clear that Mamtani is not alone in his bullish view. The average price target here, $147.40, is even more optimistic, suggesting an upside of ~145% from the current trading price of $60.12. (See Cassava stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.